Introduction to Oregon Taxes
State government is largely supported by personal income and corporate excise taxes. Local governments and schools are largely funded by property taxes. Oregon is one of only five states in the nation that levies no sales or use tax.
The State of Oregon does not impose:
- Motor vehicle excise tax
- Business and occupations tax
- Direct levies on intangible property such as stocks, bonds, or securities.
State government receipts of personal income and corporate excise taxes are contributed to the State's General Fund budget, the growth of which is controlled by State law. Oregon must balance expenditures with receipts and cannot operate in deficit or maintain a surplus. State law requires the return of unanticipated revenues to taxpayers.
Oregon has a personal income tax usually ranking in the top 10 percent of the nation. Since Oregon does not have a sales tax, its primarily source of revenue is the income tax. Four other states (Alaska, Delaware, Montana, New Hampshire) also do not have a sales tax although some Alaska cities do levy a sales tax. Over the years, Oregon voters have rejected a sales tax nine times.
The Oregon Department of Revenue maintains a page on their Web site called Moving to Oregon that is helpful to new residents of Oregon.
Oregon Tax Facts - Oregon League of Women Votes
On April 15, 2005 the Oregon League of Women Voters passed out a flyer entitle "Oregon Taxes: Myths and Facts" at the main post office in Portland. Here are some excerpts from the flyer:
- In 2001-2002, Oregon ranked 46th nationally in combined state and local tax taxes on individuals as a percentage of personal income for state residents. Only five states have lower overall taxes. The low ranking overall is because Oregon has no sales tax.
- Oregonians pay the third highest income taxes in the nation.
- Oregon's property taxes are average.
- Oregon's corporate tax burden ranks around the middle compared to other states.
- Income taxes now pay for more than half of school operating expenses. About 6% comes from the state lottery. Local revenues (mostly property taxes) provide about 30% of school funding.
- 58% of state income taxes are spent for education, including K-12, community colleges and universities. 22% of states taxes are spent for human services, such as welfare and the Oregon Health Plan. 16% is used for public safety, including police and prisons.
- Oregon does have a spending limit. State law requires that state spending for general government purposes must be no greater than 8% of the total personal income of state residents.
Oregon Center for Public Policy
The Oregon Center for Public Policy is a private, non-profit research organization working to provide timely, credible, and understandable research, analysis, and information on public policies that affect low to moderate income Oregonians, the majority of Oregonians.
How Oregon Compares
Tax Foundation The Tax Foundation has a Tax Burden spreadsheet (MS Excel) for Oregon (as well as other states) which you can download. The spreadsheet ranks Oregon's tax burden from 1970 to 2006.
Federation of Tax Administrators For 2006, Oregon tax is $2,051 per capita (rank of 40th). At a rate of 6.5% of personal income, the state ranks 37th. FTA uses numbers from the U.S. Bureau of the Census and Bureau of Economic Analysis.
Retirement Living Information Center The Retirement Living Information Center Web site has information about taxes in all of the states. The site provides access to an array of resource materials, including reports on great places to retire, tax information on each state, monthly reports on new retirement communities, an online newsletter, books and online publications, a guide to state aging agencies, access to information about special assistive products and services, and links to online stores. Their Web page entitled, "Effective State and Local Tax Burdens by State and Rank Projected for 2007" states the following:
- Tax Burden Rank - 37th
- Tax Burden as a Percentage of Income - 10%
- Tax Burden per Capita - $3,747
- Income per Capita - $37,356
Oregon Legislative Revenue 2003 Report In late January 2003, the Oregon Legislative Revenue Office released a report entitled 2003 Oregon Public Finance: Basic Facts. Some highlights on the tax burden and its distribution:
- Oregon relies on state and local taxes considerably less than the average state (45 percent versus 57 percent) but depends more on the three other sources of revenue than the average state: federal revenue (25 percent versus 19 percent), charges or users' fees (18 percent versus 14 percent) and miscellaneous (12 percent versus 10 percent).
- Oregon's total state and local tax burden was 10.5 percent, compared with the U.S. average of 11.2 percent.
- Oregon ranks 39th in total tax burden: 38 states carry heavier loads, 11 states lighter.
- Oregon is the second-highest in state personal income taxes as a percentage of personal income, 18th in corporate income taxes, 25th in property taxes and 50th in sales and excise taxes.
- No state comes close to Oregon's dependence on a single source for state tax funds. The state relied on the personal income tax for 74.4 percent of its revenue in 2000-01.
- Washington was second nationally, leaning on the sales tax, including the business and occupation tax, for 63.6 percent of its tax revenue.
- Oregon's state and local tax burden is spread roughly proportionally. Households with incomes less than $14,525 pay higher rates (13.1 percent) than the 11.4 percent statewide average owing mostly to the property tax's impact on low-income families. High-end families with household income above $126,173 also pay slightly more (12.4 percent), largely owing to the progressive personal income tax and limitations on deductions and credits based on links to the federal tax code.
- Effective tax rates (all state/local taxes divided by household income) are 10.2 percent for families with incomes of $14,525 to $21,225; 9.7 percent for incomes of $21,226 to $28,739; 10.9 percent for incomes of $28,740 to $45,024; 11.3 percent in the $45,025-to-$62,026 range; 11.3 percent in the $62,027-to-$80,000 cluster; and 11.4 percent for the $80,001-to-$126,173 group.
Oregon State Income Tax
Medical Expenses Seniors 65 or older by the end of a tax year can deduct all their medical expenses in Oregon. The federal return only allows a deduction for expenses that exceed 7.5 percent of income.
Oregon Corporate Taxes
Tax burden for companies in Oregon and Washington, each of which has a piece of greater Portland, is lower than in most other states, according to the Tax Foundation. Ranking states for "best business tax climate," the Foundation places Oregon 9th and Washington 12th.
Similarly, accounting experts at Ernst & Young, who calculate "total effective tax rate" by taking into account property, receipt and sales and income taxes, cite Oregon's as second-lowest in the U.S., at 3.8%; Washington's is 5.8%. Delaware's total effective tax rate is the nation's lowest, at 3.5%, and Alaska's the highest, at 11.6%.
Greater Portland companies have another tax advantage on either side of the Columbia. Oregon has no sales tax, which can be a boon for companies making big equipment purchases. And Washington has no state income tax, a selling point for prospective employees.
More tax facts:
- Oregon's corporate income tax rate of 6.6% is 16th-lowest in the nation. California's rate of 8.8% ranks it seventh-highest.
- Oregon collects $120 per capita in corporate taxes, while California hauls in $286
Retirees - What Income is Taxed in Oregon
Oregon taxes that part of the annuity from federal government retires for service after October 1991. Retires can visit the Oregon Department of Revenue Web site to calculate what you would pay.
Oregon does not tax Social Security, Veteran Administration benefits, or Railroad Retirement Board benefits.
Property Taxes
The property tax in Oregon is used for the support of local taxing districts such as public schools, cities, and counties.
The property tax applies to privately owned real estate such as land, homes, farms, stores, factories, warehouses and commercial offices. Personal property held for the use and enjoyment of individuals is exempt from taxation. However, personal property such as machinery, equipment and supplies used to produce income, or with the potential of producing income, is subject to taxation. Assessed taxable values are 100 percent of true market value.
The rate of taxation on property is governed by the needs of the taxing districts within the constitutional and statutory limits. After a district has gained voter approval of its tax base, the district can levy the tax base amount plus 6 percent each year without seeking further voter approval.
History of Property Tax Measures
- 1990 - Measure 5: This measure limited tax rates to $15 per $1,000 of market value. Still in effect when assessed, or taxable, values are close to market values.
- 1996 - Measure 47: A key provision took assessed values for each property back to 1995, cut that figure by ten percent, then allowed taxable values to rise by three percent a year going forward. Allowed exceptions for tax levies approved in a November general election in even-numbered years or by half of registered voters at other times.
- 1997 - Measure 50: Clean-up measure drafted by the Legislature that clarified and implemented Measure 47. Exempted urban renewal taxes and Portland's police and fire pension and disability levy from the cuts.
Tax Limitation (Compression): Measure 5 Limits The Oregon Constitution also sets limits on the amount of property taxes that can be collected from each property tax account. These limits are often called the "Measure 5 limits." To figure these limits, taxes are divided into categories described in the constitution. The categories are: education, general government, and non-limited, which is usually general obligation bonds. The limits are $5 per $1,000 of Real Market Value (RMV) for education taxes and $10 per $1,000 of RMV for general government taxes. RMV is defined by law as the lowest amount a property would sell for during the assessment year.
Measure 47 This 1996 measure pegged a home's assessed value back to the level in 1995, cut that value by ten percent, then capped its growth at three percent a year. This measure did not call for a reassessment when a home sold. Neither did Measure 50. This was also a measure that amended the state constitution.
Taxable Value Limitation: Measure 50 The Oregon Constitution limits the amount of property value subject to taxation. The value limit is called Maximum Assessed Value (MAV). Once established, the MAV is allowed to increase each year by no more than 3 percent. There are exceptions to this limit, however. The addition of a new structure, major construction to an existing structure, subdivision or partition of the property, and voter approved bond issues (e.g., parks, libraries, etc.) are examples of exceptions that would increase MAV by more than 3 percent. Also exempt is the Portland's police and fire pension and disability fund. Visit the Oregon Department of Revenue Web site for detailed information on Measure 50.
Net Result of the Above Measures
The net result is that Portland, along with the rest of the state, remains suspended in the 1995 time period when it comes to property taxes. This means that neighborhoods and areas within Portland have many disparities for homes of equal value. Overall, outer east and some areas of outer Southwest Portland have the highest taxes in the city. Relatively low taxes are scattered in pockets throughout the city but mostly come in North and inner Northeast, where the 1996 reassessment fell by the wayside with the adoption of Measure 50.
The Oregonian published the below figures in early September 2005. They will help you determine taxable values (i.e., assessed values) compared with estimated market values by Zip Code:
- 70% to 80%: 97201, 97229, 97230, 97236.
- 60% to 70%: 97206, 97210, 97216, 97219, 97220, 97221, 97231, 97233, 97239, 97266.
- 50% to 60%: 97202, 97203, 97212, 97213, 97214, 97215, 97218, 97227,
- 40% to 50%: 97211, 97217.
- Below 30%: 97232.
Gas/Diesel Taxes
Both gas and diesel fuel is taxed at the rate of 24 cents per gallon in Oregon. in addition, Multnomah county (where Portland is located) has a .03 cents per gallon tax and Washington county has a .01 cent per gallon tax. the national average for gas tax is 18.4 cents per gallon. Oregon gas tax ranks in the top 10 states. Only service station attendants can pump gas in Oregon. Visit the Oregon Department of Transportation Web site to learn more.
Oregon usually tops the nation in overall gas prices. No one know exactly why Oregon's gas prices are so high. See the latest information on gasoline prices from the American Automobile Association - Oregon.
Beer, Wine, and Cigarette Taxes
Oregon Beer Tax The Oregon tax of $2.60 per 31-gallon barrel (8 cents a gallon) is the 46th lowest in the nation and which hasn't been raised since 1977. That's less than a penny for a 12-ounce beer. It in the bottom 20 percent in the nation and one-third of the national average which is 18.5 cents. Washington state's beer tax is 26 cents a gallon and California taxes beer at the rate of 20 cents a gallon. Microbreweries (producers of less than 3.1 million gallons per year) account for 10 percent of the beer consumed in Oregon - the highest percentage in the nation.
Oregon Wine Tax At 67 cents a gallon (13.4 cents for a fifth of wine), it ranks in the middle among states - the national average is 60 cents a gallon. It has not changed since 1983.
Oregon Spirits Tax In Oregon, the government directly controls the sales of distilled spirits. Revenue is generated from various taxes, fees and net liquor profits.
Oregon Cigarette Tax At 1.18 cents a pack, it ranks number 18 among states. Washington state taxes cigarettes at $2.02 a pack and it is number three. In 2007, about 524,000 Oregonians - nearly one in five adults - smoke. Smoking was more common in Oregon than nationwide until 1998, but has become less common since.
